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MosNews.com, April, 2004
http://www.mosnews.com/money/2004/04/08/outsourcing.shtml

Russian Software Programmers are a Hot Export Item

High qualifications and relatively low labor costs make Russian software programmers a lucrative investment for Western companies. Russian programmers have already become a hot export item. This does not mean, however, that the software specialists are leaving Russia in their droves. Quite the contrary, U.S. corporations prefer to outsource development of software in Russia.

In 2003 the volume of export of Russian software was $475 million, which is 60 percent more than in 2002 and nine times as much as five years ago, according to data provided by the Russian internet resource Worldeconomy.

The figures of the Russian software outsourcing industry are still nowhere near the results posted by India, which is the leader in outsourcing production and annually exports $10 billion worth of software products. Nonetheless, such companies as Boeing, Dell, Intel and Motorola have already established new technology development centers in Moscow, while many other U.S. companies work with Russian programmers on a contract basis.

The interest demonstrated by the U.S. companies is quite understandable, writes Newsru.Com. According to Alexis Sukharev, the president of the Russian software developing company Auriga, the average annual salary of a Moscow-based programmer is $12,000. This is somewhat higher than in India, but at least five times lower than the average salary of a U.S. programmer. Thanks to this, the client can save as much as 60 percent by developing his software product in Russia.

A relatively cheap workforce is not the only advantage of the Russian programmers, who also rightfully boast high qualifications and traditions dating back to the years of Soviet science. In India, meanwhile, the staff turnover is so big that it is quite difficult to create a valuable team of software developers.

But working in Russia is not without its problems. The majority of software developing companies have no more than 20 programmers on their staff, which makes them too small to successfully compete on the international outsourcing job market, notes the Business Week magazine. The marketing activities in such companies are no more than a maintenance of informal personal ties with the potential clients. The Russian high-tech industry is in real need of consolidation, but the majority of local managers have neither necessary knowledge nor experience to conduct mergers and takeovers.

Many representatives of the Russian high tech industry say that the authorities fail to pay enough attention to this sector of the economy. They cite India’s example, where the government created special zones, where small developer companies can cooperate on projects, saving money and increasing their effectiveness. In Russia such cooperation between the state and the high-tech industry is a thing of the distant future.

 
 
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